Building supplier relationships is great for boosting your supply chain’s productivity. Your suppliers are strategic to the success of your supply chain operations. It only makes sense that you invest and build quality relationships with them.
Because of how critical your suppliers are to your supply chain, building relationships with them might require a nuanced approach. However, this depends on their importance to the supply chain management.
In this article, we will explore tips organizations and their supply chains can use to build these relationships.
How can Supply Chains Build Relationships with Their Suppliers In Africa?
Let’s explore five working strategies for building supplier relationships in Africa
1. Clear and Consistent Communication
If you think about it, everyone and every supply chain communicates with their stakeholders, including the suppliers. The difference is that not all communication is clear and concise. Many times, these communications are not even consistent.
If you want to build good supplier relationships, you must change that. Think about it: there are no relationships without effective communication between the parties involved.
Communication involves stating expectations and receiving feedback on them. Making it clear and concise ensures all parties can understand each other clearly. When you can do this consistently, you quickly discover that you and the suppliers are working better.
2. Address Concerns Immediately
Many times in the supply chain operations, you will encounter issues or concerns from your suppliers. It could be a quality issue, or maybe you just don’t like the services or how they were presented.
Always endeavour to address this issue immediately with your suppliers. It ensures they pick up on it if it is an error. If it was intentional, at least they know you do not appreciate it, which often puts an end to it. Many suppliers, in a bid to save money, will want to see what they can get away with.
Addressing these concerns early on saves your supply chain a lot of stress, and it also lets the suppliers know you are monitoring them. It promotes better working relationships between both parties.
3. Be Fair With Your Suppliers
Building supplier relationships will be difficult when all you want to do is take and take without giving up a fair price or any other value for what they are offering. When this is your philosophy, the suppliers will never be hard-pressed to go above and beyond for your supply chain.
Always try to negotiate a good deal, but always remember that no matter how good a deal is, it still needs both parties at their best if it will materialize. Many supply chains, because of financial power or market presence in Africa, try to get away with marginalizing the suppliers.
Because of this mindset, the suppliers end up frustrating the supply chain operations. In my experience, nobody wins at the end of the day. Being fair to suppliers ensures you win goodwill, and your supply chain is their priority.
4. Pay your Suppliers on Time
Many supply chains in Africa tend to enjoy withholding payment from suppliers. This often goes on for months on end. These supply chains quickly develop a bad reputation in the market, and suppliers are weary of working with them.
Many times, the guilty supply chains are forced to deal with suppliers who do not meet their standards simply because they have lost goodwill with others. No matter how financially capable a supplier is, when payment is withheld, they will favour other business partners.
Paying your suppliers on time also empowers them to reinvest in their business, which enables them to serve your supply chain better. It also makes your business more attractive to these suppliers.
5. Leverage Technology
Tech solutions are great tools for enhancing and building supplier relationships. These solutions include SRM (Supplier Relationship Management), LMS(Logistics Management Software), and others.
They help in the tracking, monitoring, and flow of information with suppliers. You can leverage them to create visibility and transparency with these suppliers. Monitoring their interaction with the supply chain or its operations is also possible.
Leveraging technology is a no-brainer because of its ability to make the entire building process as seamless as possible. Your supply chain doesn’t have to chase after suppliers when they can effectively track and monitor them from one location.
Why is Building Supplier Relationships Important?
There are several reasons why building a good relationship with your suppliers favours your supply chain. We will explore five of them here.
𝟭. 𝗖𝗼𝗻𝘀𝗶𝘀𝘁𝗲𝗻𝗰𝘆 𝗮𝗻𝗱 𝗥𝗲𝗹𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆: Think of your suppliers as individual businesses. When you have a strong relationship with them, there is a higher chance they will prioritize your business. This leads to consistent and reliable delivery of products or services, reducing disruptions in your supply chain.
𝟮. 𝗡𝗲𝗴𝗼𝘁𝗶𝗮𝘁𝗶𝗼𝗻 𝗟𝗲𝘃𝗲𝗿𝗮𝗴𝗲: Think of McDonald’s and Coca-Cola. Do you think they argue too much over prices? Suppliers are more willing to work with you on pricing, terms, and conditions when a good relationship exists. It will help in cost savings.
𝟯. 𝗤𝘂𝗮𝗹𝗶𝘁𝘆 𝗮𝗻𝗱 𝗜𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗼𝗻: Collaborative relationships with suppliers can improve product quality and innovation. Suppliers may offer better materials, suggest process enhancements, or provide access to the latest technology and trends.
𝟰. 𝗦𝘂𝗽𝗽𝗹𝘆 𝗖𝗵𝗮𝗶𝗻 𝗘𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆: A good relationship ensures suppliers take your business and supply chain seriously. It ensures they understand your business and its requirements. With this, they can tailor their operations to meet your needs more efficiently. It also leads to streamlined processes and shorter lead times.
𝟱. 𝗖𝗼𝘀𝘁 𝗥𝗲𝗱𝘂𝗰𝘁𝗶𝗼𝗻: When there is a good relationship between your supply chain and its suppliers, cost reduction typically follows. This is because relationships can result in cost reductions through bulk purchasing, improved terms, and reduced overhead in managing multiple suppliers.
Factors to Consider When Building Supplier Relationships
There are a few factors to consider when building supplier relationships. These factors are what will ensure productivity and a mutually beneficial relationship.
- Strategic Impact
- Supplier development
- Contract Terms
- Flexibility of Both Parties
- Clear objectives
- Long term perspective
- Mutual Trust
- Performance Metrics
- Risk Management
- Exit Strategy
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
